15 Cities Where Renting A Home Makes More Sense Than Owning One

REUTERS/Larry Downing
As a renter, it's easy to feel pressure to buy. Owning a home means you can start building equity and cash in on tax breaks. But in some parts of the country, it can take quite awhile to break even on a home purchase, making it more financially advantageous to rent for a few years.

Based on Zillow's breakeven horizon— the number of years it takes before owning a home makes more financial sense than renting the same home — here are the top 15 cities where renting rules.

San Jose

If you have the option to rent or buy the same San Jose home, renting could be a smart option because it takes 2.5 years for buying to be more financially advantageous. The median home value is currently $671,800, up 16.2 percent year-over-year. Rents have also increased but not as much, making it a great time to snag a rental.

Seattle

It's also a great time to rent in Seattle if you don't plan on owning the same home for more than 2.5 years. While home values aren't appreciating quite as fast as in San Jose, they're still seeing double-digit growth with a 10.3 percent increase since this time last year. Seattle's median home value is currently $441,500.

San Francisco

The San Francisco real estate market has seen double-digit growth over the past year, with the median home value up 15.1 percent. If you don't plan on staying put for about three years, however, you're better off renting and investing some of the money you could spend on a home purchase to earn interest elsewhere.

Colorado Springs

Colorado Springs is a good place to rent if you aren't ready to settle down for more than three years. The housing market is strong there, with the median home value up 4.5 percent year-over-year to $195,300. However it still takes 2.8 years for buying to beat renting.

Phoenix

The Phoenix for-sale market is also strong with the median home value up 10.9 percent since this time last year. If you might move in the next 2.8 years, though, it makes more financial sense to rent than buy. The good news is the median rent is currently $1,089 — the lowest of any city on this list.

Phoenix is the most affordable of the top cities for renters. Starting at $1,081, a 2-bedroom apartment in this complex comes with access to several community amenities including a pool, arcade room and volleyball court.

Mesa

Mesa, AZ rounds out the four-way tie for cities where renting beats buying if you plan on moving in the next 2.8 years. The median Mesa rent is currently $1,149 per month, while the Zillow Home Value Index is $172,500.

Minneapolis

The median Minneapolis rent increased 3 percent over the past 12 months, while the median home value is up 6 percent year-over-year. It takes three years to break even on a home purchase, making renting a favorable option for many residents. A median home costs around $187,800 to buy or $1,491 per month to rent.

New York

Perhaps unsurprisingly, it also takes more than three years to break even on an real estate purchase in New York. If you want to try living in different parts of the city during that time, renting is a good option. You can expect a median rent of $2,192 per month. While on the pricey side, current market conditions have made renting in Boston or San Francisco equal to or more expensive than renting in the Big Apple.

Boston

It makes more financial sense to rent than buy in Boston, unless you plan to stay put for at least 3.3 years. Either way, Boston is a hot market: The median home value rose 8.4 percent, and the median rent rose 3.3 percent over the past 12 months.

Virginia Beach

The median rent in Virginia Beach increased by only 0.8 percent year-over-year, which is great news for renters. The breakeven horizon there is 3.5 years, so you may be better off renting a home than buying for that time period.

Washington, DC

Washington, D.C., ties for the third best city for renting unless you plan to own a home for 3.5 years. The median rent is currently $2,453, a 0.3 percent increase since last year. The median home value is also up 14.4 percent to $454,900.

San Diego

San Diego may see a few more sun worshipers choosing to pay month-to-month. With a breakeven horizon of 4.2 years, renting beats buying in the near-term. Existing homeowners are also seeing strong market growth with the median home value up 12.3 percent year-over-year.

Honolulu

In tropical paradise, renters rule. It takes 6.8 years to break even on a home purchase in Honolulu, so finding a place to rent at or below the median rent of $2,276 is a smart move. In fact, the median rent is down more than 5 percent year-over-year, so now is a great time to sign the lease on your dream beach rental.